STBA - Earnings call transcript Q4 2018

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Operator

Greetings, and welcome to the S&T Bancorp Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Kochvar, Chief Financial Officer. sir. you, Thank

begin. You may

Mark Kochvar

very for much. and you afternoon, Good in today's you participating thank conference Thank everyone call.

and risk presentation. about Before forward-looking full be beginning obtained I refer quarter Investor S&T's statements of the statement to language XXXX front will earnings provides for of by the copy take release to A Todd is you. be fourth in of and at your screen would results. our included year release can to forward-looking This in who introduce provide the by presentation, Commission you Brice, the may I to by press an Securities statements www.stbancorp.com. want the like Exchange Relations website factors, visiting that on S&T's on which this overview clicking now cautionary Officer, screen Chief statement time link required on our or and Executive

Todd Brice

once We're Mark, you, thank Well year results. and to and very afternoon everyone. solid quarter full pleased again good announce

Tax or quarter share For per of per million XXXX income $XX.X we're fourth per $XX.X net in reporting $X.XX quarter and million XX/XX/XXXX, or share the $X.X or share million versus ending impacted $X.XX $X.XX the of Jobs XXXX XXXX. the the share in quarter Act. third $XX.X results by were million as result and Remember, remeasurement of to tax related negatively a a adjustment XX% or the deferred

reduction the ratio versus XX.X% a again, attributed and tax of were X.X%. metrics by of also asset improved QX. In on the to return Operating impacted contribution. XX.XX% of XX.XX% million the very in addition, of pension for equity XX.XX% or very, return QX equity were with results on strong per to on tangible efficiency and Return our onetime $X.X $X.XX share positively quarter

last full tax year, effect million back equity year, versus the strong income return return deferred XXXX of per $XX.X million on share. or XX.XX%. the $X.XX of -- were at per very metrics were $X.XX $XXX.X For on equity operating or X.X%, non-GAAP a million the or of again, you earnings common the asset out return year, record in of was $XX XX.X% and the remeasurement were for $X.XX tangible on a net per full very, share, share. When And with

again One strong highlights deposits. of and sheet spread quarter of in On basis, And loans was growth the all quarter portfolio annualized. a of $XXX linked Deposits another for annualized $XXX increased which the million, was markets was CD out balance million and categories, loans respectively. million, $XXX.X increasing or money in across market both XX% X.X% the our million growth and portfolios. of bright spot and segments increased or $XXX.X were most our the and growth the

did shares of make we in volatility a program. authorized the buyback share December, under decision stocks repurchase to financial previously With the

on the For $XX.X dictate. when the flat average our X% equity of and forward, we linked quarter market common total looking X.XX% may less at shares Tangible total quarter, was million. X.XX% the an quarter we additional repurchased XXX,XXX times at at a shares of than $XX.XX shares price conditions end at essentially or versus was opportunistic outstanding of repurchase slightly basis

QX. credit charges line and in in line deteriorating credits the our appropriate for conservative X% for increase assets was previous X% quarter in attributed Consistent basis by and expense expectations. practices have and we three to range past with points recognized asset experienced to trends. is with range. in the reserves financial valuations Net have obtained our that Non-performing XX and million a is charges target were did $XX.X Our current commercial have the TCE provision the year the From standpoint, for with metric guidance.

XX, Chief to named which I'm years increase now the is as in years, for Lending February will and a he approved been payable by to over as company instrumental newly to over lending in markets. of working Officer. same presidents capacity Lending Directors his last or our of contributor newly approach our the we XX.X% a significant continue our $X.XX Board our past. in has turn our In capacity is Chief from David program past per success. his to to overall in and managed Antolik, the activities year. of Finally, in is an providing going on dividend Lending how our going Officer for leadership President. $X.XX five big period had and our together role Dave XX Chief the I pleasure coordinate current shift Officer have XX new been leading appointed new This the which market-based the had our his he market Dave a share

that However, job do great going it's enhance already to longstanding we the in building relationships.

their in our our to presence forward, broaden continue Moving promote engagement. respective the to market customer S&T markets brand will

about working initiative excited look S&T forward like with new So, President we only to the our turn the And that Dave's Dave I'm over enhance that confident returns deliver I'd Bank it now will to to I'm program years. many Dave Antolik. shareholders. will this new for leadership and under for

David Antolik

of appointment market-based start Underlying our me strategy in a to the as my Todd providing thanking a opportunity platform. Good is afternoon, growth and serve change for fundamental the Board everyone. Directors want to to President. Bank's by our true

fourth of in recognize commitments unique success Western year. commitments with Ohio business we we at market commercial for experienced offset of provide impacted Central And lines, we Northeast all integrating our and all five growth successful quarter. As very upon strategic expanded support the $XX loans growth, driving in million and you increase each I'd unfunded in C&I five opportunities presidents positive provide including primarily be into the company. long-term loan loan factors in New originators Upstate same Pennsylvania, solid an highlights versus net a that is this market serve following. residential Ohio, XXXX that mortgage of strong the is to X.X% total and that S&T. We million in now by By to believe opportunities year greatly growth result our was consumer activity. caps our We a our quarter loan vision $XX these take by with of that advantage million distinct for That a will real York. of in growth. each our in QX customer activity: decisions We of see $XX added record during net driven pipeline million. construction of build of for expansion $XXX Pennsylvania, ability million solid period Several the support and annualized. in each is long promoted did and increase decline A history growth, markets, market some the strategy. of Central recently by income a $XX like during result an We mortgage know balances. last and $XX enhanced XXXX we during enter for commercial million construction total This estate quarter. acquisition partially commercial reflected our or

to We XX% also saw quarter-over-quarter. increase XX% rates from utilization

its with for business approximately coming of Our loan strongest growth net recent had fourth banking in year in history division half the quarter. its quarter the

than experienced lower million in $XX quarters. approximately prior three were levels the payouts Additionally,

our deals grow to order booked in reinvest market. an to first is the quarter Berks which our County, the bank continue during extension Central and in of We Pennsylvania Pennsylvania,

and levels anticipate additional our location mid-single also and We to Columbus year. financial branch details for activity the Mark growth a of spring. results. with opening and relocating current second our in to favoring late seasonality provide look an now Akron forward this the some will XXXX February to LPO of market the on full-service the on office loan Based we planned balanced growth digit additional half serve And

Mark Kochvar

to interest interest pricing lower The Right. about and points improved margin by Thanks, compared competitive third rate Net to the due Dave. average quarter sheet also strong by due growth. basis environment strong interest income net X balance points. rate declined bearing to $XXX,XXX outpaced basis at the increase rate to which XX liability came NIM growth at The in earning in spread basis XX compared of due the rate. to improvement a asset incremental points

margin returns. basis in and betas first expecting of points sheet the quarter deposit a now interest accelerate X compression growth are We X balance to as net

We With a and revenue. growth managing exceptional NIM and pause Fed impacted compression specials we lags. right market balance actively expenses pricing this and sheet the further continue are decline. through into between to growth, were to fourth quarter followed in the balance fees Both find by expect by and the similar stabilization would second quarter deposit quarter the as work stock the we beta

value P&L in an results. changes in offsetting typically large We that is and is expenses. is have the on accounted a to liability market our plan compensation balance fees and This offsetting sheet, up show asset enough for quarterly as deferred result not neutral and

However, declines income in we due of expenses. decline fees equity our holdings the in fees, and a quarter, Also, we the are statement. to both that market through experienced had in an significant value XXX,XXX fourth in $XXX,XXX marked the decrease

well no side expenses the On large controlled overall levels with remain other variances. notable

million and $XX.X XXXX $XX.X and income $XX.X million into range range we million between quarter $XX.X per million quarter. forward expenses to and expect to Going fee between per

XX% our XXXX. tax in We to to XX.X% the in range expect settle rate

at do asking and loan declined I’d time this for risk-based fourth did like operator turn quarter over ratios Our much as capital some repurchases. it slightly strong the to questions. instructions very share provide in to growth the Thanks was to we

Operator

Thank you.

[Operator conducting a be now will We question-and-answer you. Thank Instructions] session.

comes KBW. Collyn Our from your question proceed the with Gilbert of with first question. line Please

Collyn Gilbert

guys. afternoon, Good Thanks.

seem the really and feel you kind talk bit about to wake going you like ability mean know just David, Can gave your color, again growth. hear is quarter about about to wanted still forward. more favorable pretty sounds in a loan some that? to a of in wanted in Obviously bit your and guess the I it little this a Just you just more outlook grow environment, just loans of to talk slowing I little about came that? strong but I economic maybe optimistic

David Antolik

that combination Yeah, I I mean was of it factors mentioned.

increase. a rate the increase utilization commitments And book see in did as we well. C&I So

good Group of So particularly in And then [ph]. our activity Shore saw geographic of growth C&I markets. all North out a coming perspective, we from

results with regard And in really, additions staff segments, of the all strong we of in in It's a good and all across added bankers that that as few as space markets. we Board loans saw really our the MLO made to then pretty segment have BXB paid consumer to of off well. well. our hires space Some the growth in and the the

Collyn Gilbert

what could XXXX? in growth potentially Okay, mean be to I you do you your of deliver what would loan outlook terms -- think guys as in

David Antolik

by down about is think in million the accelerate I loan quarters. doable. the mid-single relative it digit to fourth $XX see three were Yeah, did because quarter first growth We payouts

wind did our we have So at that back.

Collyn Gilbert

NIM of know just the And Okay. spreads maybe seeing then to what is as than driven, in deposit was But more based originations had your yields. indicated pipeline, on you’re terms loan Mark on you seeing of that current you’re I thinking that’s lesser asset new so coming origination the driven yield than kind curious on these it the just rate. and new pricing on

Mark Kochvar

the prior loan quarter Yes, points couple which side was up the basis quarters. in from the fourth so is commercial X.XX%, about about overall XX on new

seen So, decent we pricing. some have loan

Collyn Gilbert

are just to new, what your incremental that’s new pay Mark in for deposits on the And having on… that door, then Okay, the you the range are helpful. coming

Mark Kochvar

as X.X basically. new ones the seeing our on rates, growth better lower some the but we’re the also I'm coming account, in indexed are come rate, XXX side, around that for repricing average. to We is some market sorry, within some in at did funds at Fed that CD money of deal book see deposits prices the on a

Collyn Gilbert

Yes.

on Okay, you there the lastly, costs a the think timeline this in and you to to that the okay. three then what give and color also And those? when went kind bit of credits just be of of the quarter, and book that kind as might then they to were nonperforming just resolution can little history originated,

Todd Brice

of offs. kind three all they're So, one

was construction C&I a one's CRE, a and So credit. one one's

second I at. some, had -- And you As near the taken we've mean quickly in as QX. we through into quarter, plus a done -- the come and taken resolution, for somewhere tried consistent third probably then favorable our as in we've off past, the like bleed the know levels worked them current them to with we they valuations the again, the we years and on Collyn, over late -- at might we books three far as carrying had marks but maybe can probably and the that them past resolution, have we were practices in

Mark Kochvar

support [ph] understand. and in just Yeah,

really of distinct were our these pieces in situations different three portfolio. different and So

to here of our inherent is pointing nothing now. portion certain there's portfolio So, in that anything any right

Collyn Gilbert

Okay.

helpful. Okay. That's

leave I'll Thanks, it guys. there. Okay,

Todd Brice

Thanks, Collyn.

Operator

comes question Matthew with Jaffray. next Breese Our of your from question. proceed Please Piper the with line

Matthew Breese

Good afternoon.

Todd Brice

Matt. Hi,

Matthew Breese

Maybe margin question. just following up on the

You that the spread did note coming in. incremental was

curious spread quarter what I to look it shaking that What's to XQ? out the extent relative was just so And first is like? compression

David Antolik

to is had where stays some that about My two here basis That's is, best the estimate now curve we've assuming one additional days. in last couple right it flattening points.

So runs but a the any have we're year. in the Doesn't rest additional factoring impact of were changes the us, Fed last really model before that. not on huge for

we I with all expect have absent basis couple anticipate So we that that and that of points. the growth

Matthew Breese

Understood.

Okay.

a know mentioned Is loan up for annual of to again year growth, close to end XXXX? down Okay. that a expectation deals pick your then some down they sort there lower of that And to page slowed turning then until... get rush bit. Or the was the and I towards prepaid maybe you you to

Mark Kochvar

There wasn't of the XXXX. at end

to the XXXX. fourth we I not would level significant saw low as we relative to year slowed that anticipate prior saw but So quarter the we rush. moved they XXXX, in same the in a

E I the a think there's react CRA particularly to the move customer still that rate space base permanent deal. need -- some fix sense long-term to in among to they

provide we with see Although fixed help able some drive fee retain that them a nice income QX, drove in clients we to and from where did rates. better -- perspective swap activity were

Matthew Breese

it. Got

Okay. And assuming $XXX,XXX nearly salaries on add-back a quarter? then $X that should that million good run for benefits to compensation the I'm in front. we first or just and a rate

Todd Brice

correct. That's Yes.

Matthew Breese

Okay.

three lastly being just the were those And credits, loans those yours? Okay. then or syndicated on just

Todd Brice

ours. were They

Matthew Breese

they how Okay. And out? then spread geographically, are

Todd Brice

our in in one's across [ph] one ones - specific - market our two one are and FPA market market. in They two and in

Matthew Breese

And Okay. repayment? guarantees personal are sources of what or there are the

Todd Brice

Yes.

you have and provide have to you estate you more so -- and when real want So, some color? Pat leases

Patrick Haberfield

estate There's looking So to to concern. And obviously leases estate. guarantees any there's and on you're new are going we that have obviously ongoing lease up the one the assets at structure real value [ph] C&I some obviously that related and those certain extent credit have in more on real one a activity. we're

Matthew Breese

better same? post quarter are Is end. -- or the worse how And or performing there got Understood. they

Patrick Haberfield

or worse. Yeah, any I don't think any better

Matthew Breese

Understood.

Okay.

above? regard Okay. I guess the interest, activity to last one is M&A chatter just the all in

Patrick Haberfield

Yeah. where stock like the the valuations are. We of

movement and companies. earnings just, targets we're right of rushing that sell interest folks But still their not it's So lot seen overall of our year. was have willing with be we haven't for on it people was conversations and just makes we having honest kind to currency It's strong, in. we've potential to books would interested been -- an one one a I that but There been think, are with good to see financials of a weren't that a now lot quiet. I in. there that mean, been you, you'll smaller last

Matthew Breese

Understood. for my I All Thanks taking all right. That's had. questions. Okay.

Patrick Haberfield

Matt. Thanks,

Operator

from Our comes Please with next D.A. the line question. proceed Davidson. with Gunther Russell question your of

Russell Gunther

Good afternoon guys.

Todd Brice

Russell. Hey

Russell Gunther

any as on appreciate for the strength a Hey, strength digits? what's both a as of mix the that I right verticals expect you geographically. your would Could you XXXX shake broad from quarter loan you a well source the being particular comments growth vertical perspective, loan outlook mid-single based, maybe of more are that and within now? to your out share at How geographies for this

Mark Kochvar

been geographies, for they relatively of that years newer Ohio very I our and but speaking, growth. the strong drive and or are teams have central adding markets, incremental certainly we markets in mean, Yeah, of three we're five we base. terms They're Pennsylvania, Central lot have and in banker a to

and has deals as anticipate strong eastward. gotten continue central And we in in a I for just our Dobis, which with Ohio Ohio we've C&I of us. anticipate decent CRE of in Central PA, we'll new first market a Brian County Pennsylvania, we is that And mentioned the the for good activity So Central us. move been a Central see I and space. pretty C&I C&I. to booked pretty new Berks good direction I our growth manager, And platform as And mix

anticipate between we move yeah, forward. of and CRE, C&I kind XX-XX, So we split as

I was spot where bright other The opportunities growth to as mentioned well. see segments business our solid with banking seen, good and we've continue good as

Russell Gunther

to folks who me. helpful. you for just Matt's a back on us Great. quiet then for And color to in. right the for talking M&A to very question an ideal the partner of Circling Could now? give had are reminder mentioned one there, as front, Thanks it interested you you sort been last

Todd Brice

Yeah, the billion dollars to so on million $XXX to probably, low a upper end on end assets. company the in and the range up $XXX in maybe couple and million

As fill-in you that appeal have a we would we know, in geographic out there. are some at. certainly opportunities would appeal. out some with maybe have Ohio of some lot And Western that in Certainly, certainly Pennsylvania, Pennsylvania Central candidates look would areas of some have the kind options

Russell Gunther

for Thanks, it Great. taking guys, questions. me. my That's for

Todd Brice

Okay. Russell.

Operator

Our of question. Please proceed Raymond comes Daniel a Cardenas with next your from question with line James.

Daniel Cardenas

Hey. Good guys. afternoon

Todd Brice

Hi, Dan.

Daniel Cardenas

too Not bad.

see going or growth goal it's during think on day. that it year loan to a by Maybe bit end up throughout expected kind bit? of to is shaping keep up going the is a little of kind deposit warm Do color of of I to think the growth, to a that XXXX. up how little zero the you you lag with

David Antolik

be is deposits behind but will far. too side loan a goal not little that bit the probably Our

and -- grows markets from or running. on we've money We consumer continue side but program net the to of that programs some on the been the most DA targeted especially CDs, probably growth some in see also

Daniel Cardenas

the any? deposits? that see from shale any do benefit helping Is And you out

David Antolik

Not for great to us. any degree

Daniel Cardenas

for -- last well Okay, mean years foundation been And for see I that's the fair applies the been or are beginning charge-off fairly guys pause couple then quality. overall in concern of XXXX. I of credit enough. but cracks right should as for kind they've how anything you giving you any about behaved, thinking be I to it you to now levels you've for think

Patrick Haberfield

about point as This forward years. of or I you the the any No, know experienced would couple cracks same over not be guidance looking basis guess And asked. feeling looking any Pat. we've we're is at seeing you last the level that we're

Daniel Cardenas

XX in than of bit that points, basis kind less So range. little that

Patrick Haberfield

XX XX, range.

Daniel Cardenas

Great. And then popped What that up, was of was on credits think that? that kind I family home construction or three lending of kind the the was that single credit related construction multifamily.

Patrick Haberfield

Yes. anything with residential, No, not to commercial. it type do was of did have any it

Daniel Cardenas

Commercial.

collateral minimal loss Is assumption? feel these that credits. your And three levels comfortable Okay. you on expectations

Patrick Haberfield

reserves we these our on credits appropriate went again Yeah, on as the also with the impairment full charges three them we and put through and analysis well.

of So today comfortable, as we're are. where we real

Daniel Cardenas

been questions All and Okay, Thanks great. my have answered. asked guys.

Patrick Haberfield

All right, Dan.

David Antolik

you. Thank

Operator

you. Thank

no have comments. over for back to further like floor the closing questions this now We to turn time, would at I management

Todd Brice

just Have today's in participating look conference our Dave to call. and call and you discuss results the and a this for from great forward Mark and day. conference I opportunity everybody quarter's to next hearing want thank at to appreciate I

Operator

this teleconference. gentlemen, conclude and Ladies does today's

your time. Thank You at a lines this day. your you for participation and may have wonderful disconnect

S&T Bancorp (STBA) 31 Jan 192018 Q4 Earnings call transcript